Hormel Foods Corporation · NYSE:HRL
Hormel Foods — Investor Day (June 2017)
16 slides from Hormel Foods's investor day presentation, Jun 15, 2017
Slide 1: Steve Binder
Steve Binder 38 Years with Hormel Foods Executive Vice President, President, Hormel Business Units Hormel Foods Career History 2011: President, Hormel Business Units 2010: Executive Vice President, Refrigerated Foods 2007: Group Vice President, Refrigerated Foods 2000: Group Vice President, Foodserv
Slide 2: The Journey of Refrigerated Foods
The Journey of Refrigerated Foods Steve Binder Executive Vice President President, Hormel Business Units
Slide 3: Hormel Business Units
Hormel Business Units Grocery Products Refrigerated Foods Consumer MegaMex Simple Fresh Product Foodservice Foods Meals Pork Sales Meat Affiliated Nut Butters Products Businesses
Slide 4: The Journey of Refrigerated Foods
The Journey Of Refrigerated Foods Growing Our Improving Value-Added Reducing Our Exposure to Value-Added Sales Profitability Commodity Margins Value-Added Sales Value-Added Profit Margin Pork Operating Margins as a % of Refrigerated +5% CAGR Foods Segment Profit Over 700bps -1100bps 2011 2016 2011 2
Slide 5: Refrigerated Foods: Three Distinct Businesses
Refrigerated Foods: Three Distinct Businesses Commodity Fresh Pork 1 Products Business Transfers Internal Pork Raw Hogs to Other 2 Materials Segments Supplier Branded, Value-Added 3 Branded Products Food Business
Slide 6: Refrigerated Foods: A Fresh Pork Business
Refrigerated Foods: A Fresh Pork Business Commodity Retail & Foodservice Fresh Pork Products • Complements branded business in retail and foodservice Transfers • Outlet for excess products Pork Raw Hogs to Other Materials Segments Provision Sales Branded, • By-products • Offal Value-Added Products
Slide 7: Hog and Pork Procurement: Financial Impact
Hog and Pork Procurement: Financial Impact Pork Operating Margins as a % of Refrigerated Foods Segment Profit -1100bps TRIM 2011 2016 From 2011-2016, Pork Operating Margins have averaged 15% of Total Net Buyer Net Seller Balance Refrigerated Foods Segment Profit Internal data
Slide 8: Hog Procurement: Inputs for Value-Added Business
Hog Procurement: Inputs for Value-Added Business Goal of our hog procurement is to source the ideal hog for our value-added business • Use of producer incentives to help deliver consistent hog characteristics • Strive for a contract mix that reduces cost volatility • Generally does not track the quo
Slide 9: Investing In Growing Our Retail Business: Our Harvest Facilities
Investing In GROWING OUR RETAIL BUSINESS Our Harvest Facilities COOLING EXPANSION AUSTIN PLANT CURRENT FOOTPRINT ANIMAL HANDLING IMPROVEMENTS Internal data
Slide 10: Market Factors We Are Watching
Market Factors We Are Watching • Timing of new hog supplies AN ESTIMATED • Timing of new capacity 12% INCREASE • Strength of domestic demand IN CAPACITY • Strength of US exports • Pricing of competing proteins
Slide 11: Refrigerated Foods: An Internal Supplier to Other Segments
Refrigerated Foods: An Internal Supplier to Other Segments Commodity Products Fresh Pork Exports Transfers Pork Raw Hogs to Other Materials Segments Branded, Value-Added Products Internal data
Slide 12: Refrigerated Foods: Branded, Value-Added Business
Refrigerated Foods: Branded, Value-Added Business Commodity Branded Food Business Products Transfers Pork Raw Hogs to Other Materials Segments Branded, Value-Added Products
Slide 13: Meat Protein Purchases: Diversification Beyond Hogs
Meat Protein Purchases: Diversification Beyond Hogs Pork Commodity Products Beef Turkey Transfers Pork Raw Chicken Hogs to Other Materials Segments Externally Branded, Purchased Raw Value-Added Materials Products VALUE OF ANNUAL PURCHASES* *Excluding Jennie-O Turkey Store
Slide 14: Value-Added Sales & Margins Have Increased Substantially Over the Last 5 Years
Value-Added Sales & Margins Have Increased Substantially Over the Last 5 Years REFRIGERATED FOODS Total Sales Value-Added Sales Value-Added Profit Margin +2% Over +5% 700bps 2011 2016 2011 2016 2011 2016 Internal data
Slide 15: The Journey Of Refrigerated Foods
The Journey Of Refrigerated Foods Growing Our Brand Building Culture Value-Added Sales Improving Value-Added Direct Sales Force Analytics Profitability Reducing Our Exposure to Innovation Growth Strategies Commodity Pressures
Slide 16: The Journey of Refrigerated Foods
The Journey of Refrigerated Foods Steve Binder Executive Vice President President, Hormel Business Units